[Title] Case of Dispute over Removal of Interference between Shenyang Tie XX Real Estate Development Corporation and Liaoning Heng X Real Estate Development Co., Ltd., with Liaoning Sheng X Real Estate Development Co., Ltd. as the Third Party

[Keywords] Civil / Removal of Interference / Ownership / Mediation Agreement /

【Key Points of the Ruling】 If a person infringes upon the civil rights and interests of others due to negligence, they shall bear tort liability. According to legal provisions, if it is presumed that the actor was negligent, and the actor fails to prove that they were not negligent, they shall be held liable for tort. The actor shall be required to assume civil liabilities including ceasing the infringement, removing obstructions, eliminating hazards, returning property, restoring the original condition, and compensating for losses. With respect to an effective civil mediation agreement, all parties shall perform their obligations in accordance with the law. Based on the terms of the mediation agreement, the owner has the right to demand that the infringer fulfill the obligation to return the property. The party causing the infringement shall cooperate with the owner by providing the necessary documentation related to the sale of the property and shall cease the infringement and remove any obstructions.

【Basic Facts of the Case】 In September 2005, the Shenyang Intermediate People’s Court for Railway Transportation issued a civil mediation agreement. Through mediation organized by the court, Tie XX Real Estate Company reached a consensus with Liaoning Fengxiang Real Estate Development Co., Ltd. and Liaoning Heng X Real Estate Development Co., Ltd. as follows: First, the funds invested by Shenyang Tie XX Real Estate Development Corporation in Building No. 16 of Fengxiang New City, together with interest totaling RMB 17,121,119.68, shall be repaid by using part of the commercial properties in Building No. 16 of Fengxiang New City. Specifically, the properties to be used for repayment are as follows: 1. Commercial premises: doors 1, 3, and 4 on the 1st and 2nd floors; 2. Residential units: the entire sixth floor (units numbered 1-6-1, 1-6-1, 2-6-1, 2-6-2, and 2-6-3); the entire seventh floor (units numbered 1-7-1, 1-7-1, 2-7-1, 2-7-2, and 2-7-3); the entire eighth floor (units numbered 1-8-1, 1-8-1, 2-8-1, 2-8-2, and 2-8-3); and two residential units on the ninth floor (units numbered 1-9-1 and 1-9-2). Second, Liaoning Fengxiang Real Estate Development Co., Ltd. shall provide Shenyang Tie XX Real Estate Development Corporation with all relevant procedures required for the sale of the aforementioned properties used for repayment, and Shenyang Tie XX Real Estate Development Corporation shall independently organize the sale of these properties. Third, all taxes incurred from the sale of the properties used for repayment shall be paid in accordance with national regulations, and the associated costs shall be borne by Shenyang Tie XX Real Estate Development Corporation. Liaoning Fengxiang Real Estate Development Co., Ltd. shall be responsible for obtaining the property ownership certificates and land use certificates for the properties used for repayment, while Liaoning Heng X Real Estate Development Co., Ltd. shall be responsible for coordinating and providing necessary cooperation. Fourth, Liaoning Heng X Real Estate Development Co., Ltd. and Liaoning Fengxiang Real Estate Development Co., Ltd. shall promptly complete the finishing works of Building No. 16 of Fengxiang New City and ensure that the buildings are ready for occupancy before the end of the year. The commercial premises and residential units delivered for use to repay Shenyang Tie XX Real Estate Development Corporation shall be delivered as “bare-shell” units. This mediation agreement was enforced through compulsory execution under Execution Case No. 8 of 2006 issued by the Shenyang Intermediate People’s Court for Railway Transportation. During the enforcement process, Liaoning Fengxiang Real Estate Development Co., Ltd., Liaoning Heng X Real Estate Development Co., Ltd., and Tie XX Real Estate Company executed a “Handover Letter,” which stated that, pursuant to the mediation agreement stipulated in the Shenyang Intermediate People’s Court for Railway Transportation’s Mediation Agreement No. 8 of 2005 (Shen Tie Min He Chu Zi No. 8), the following commercial properties were handed over to Shenyang Railway Real Estate Development Corporation. Specifically, the properties are as follows: 1. Commercial premise No. 1, covering an area of 1,049.39 square meters; 2. Residential unit No. 2-9-2, covering an area of 79.14 square meters. Representatives of all parties signed and confirmed the handover.

On July 18, 2006, the Shenyang Real Estate Surveying and Mapping Team conducted a survey of Unit 1 at No. 3 Mingbo Road, Hunnan New Area, with a saleable area of 1,049.39 square meters. Subsequently, Liaoning HengX Real Estate Development Co., Ltd. took possession of this property and carried out renovations, changing the original single-unit space—Unit 1—with an area of 1,049.39 square meters into two separate units, and also re-designating the former Unit 1A as Unit 1. Meanwhile, on February 26, 2014, Liaoning HengX Real Estate Development Co., Ltd. requested the Shenyang Real Estate Surveying and Mapping Center to conduct another survey of Unit 1 at No. 3 Mingbo Road, Hunnan New Area, confirming a saleable area of 484.46 square meters. This newly confirmed area differs from the area of Unit 1 originally established in the mediation agreement by 565 square meters. Furthermore, the company has continued to occupy the property to this day and refuses to return it.

[Judgment Result] On November 1, 2016, the People's Court of Hunnan District, Shenyang City, issued a first-instance judgment dismissing the claim filed by Shenyang Tie XX Real Estate Development Corporation. After the judgment was announced, Shenyang Tie XX Real Estate Development Corporation filed an appeal, arguing that the first-instance court had misidentified the facts and that the property in dispute still exists, thus making the request for restitution of the property consistent with objective reality.

On January 19, 2017, the Shenyang Intermediate People's Court issued a ruling holding that the original court’s dismissal of the lawsuit filed by Shenyang Tie XX Real Estate Development Corporation lacked both factual and legal basis, and remanded the case back to the original court for retrial.

On December 15, 2017, the People's Court of Hunnan District, Shenyang City, issued a judgment ordering Liaoning HengX Real Estate Development Co., Ltd. to cease its infringement within ten days from the date the judgment takes effect, vacate the property in question, and return the property to Shenyang TieXX Real Estate Development Corporation. After the judgment was pronounced, Liaoning HengX Real Estate Development Co., Ltd. filed an appeal, arguing that the evidence provided by Shenyang TieXX Real Estate Development Corporation failed to establish the specific location of the property in question and that the company should have submitted evidence—such as the precise location and axis coordinates—demonstrating its ownership rights. Furthermore, the company claimed that it had already delivered the No. 1 entrance of Building No. 16, as mentioned in the mediation agreement, to Shenyang TieXX Real Estate Development Corporation, and therefore no infringement whatsoever had occurred.

On May 28, 2018, the Shenyang Intermediate People's Court issued a final judgment dismissing the appeal and upholding the original verdict.

【Reasons for the Ruling】 The central issue in this case is whether the property in dispute, whose ownership was acquired by Shenyang Tie XX Real Estate Development Corporation pursuant to a final civil mediation agreement, still exists today. The court of first instance held that if a party infringes upon another’s civil rights due to its own fault, it shall bear tort liability and is required to assume civil responsibilities such as ceasing the infringement, removing obstacles, eliminating dangers, returning the property, and restoring the original condition. Accordingly, Heng X Company and Sheng X Company were legally obligated to comply with the final mediation agreement. As stipulated in the agreement, Sheng X Company was required to provide the relevant documentation for the sale of the property, while Heng X Company was required to coordinate and cooperate accordingly. Thus, it is evident that all the documents pertaining to the disputed property involved in the mediation reached among Tie XX Real Estate Company, Heng X Company, and Sheng X Company were under the control of Heng X Company and Sheng X Company. A subsequent re-survey led to significant changes in the data on the disputed property recorded by the Shenyang Municipal Real Estate Administration—reducing the area from the original 1,049.39 square meters to 484.46 square meters. Heng X Company and Sheng X Company failed to consult with Tie XX Real Estate Company and obtain its approval, thereby committing a fault and incurring adverse legal consequences. Consequently, Tie XX Real Estate Company is entitled, based on the final mediation agreement, to demand that Heng X Company and Sheng X Company fulfill their obligation to return the property. During the second-instance proceedings, Heng X Company submitted an audio recording intended to prove that the property at No. 1, Gate 1, was occupied by Tie XX Real Estate Company but, due to unpaid viewing fees, the viewer had agreed to allow the occupant to use the property as a noodle restaurant. Tie XX Real Estate Company also submitted one witness statement, aiming to demonstrate that the property at No. 1, Gate 1, Mingbo Road, Hunnan New Area, was originally designated as “Gate 1A,” and in 2014, Liaoning Heng X Real Estate Development Co., Ltd. converted it into “Gate 1”; the property remained occupied and used by Li Weijian. Additionally, Tie XX Real Estate Company submitted a commodity housing sales contract dated June 29, 2007, proving that according to the 2006 survey, the axis positions of Gate 2 were: on the first floor, axes Da-3, 1a-3a; on the second floor, axes a-3, 1a-3a; and on the third floor, axes Da-3, 1a-3a, with an area of 569 square meters—a figure consistent with the area recorded in the 2006 survey. Furthermore, Tie XX Real Estate Company provided a rental agreement demonstrating that the property at No. 2, Gate 2 (the original Gate 2 from 2006) at No. 3, Mingbo Road, was rented out at the time. Finally, Tie XX Real Estate Company submitted a drawing showing that, at the time, the Railway Court had ruled that Heng X Company should transfer Gate 1, with the following axis positions: on the first floor, horizontal axes 3, 6, 8, 10, 1/12, and 15, and vertical axes D, E, F, G, and H; on the second floor, horizontal axes 3, 6, 8, 10, 1/12, and 15, and vertical axes D, E, F, G, and H. Moreover, after the trial, the second-instance court obtained from the Real Estate Surveying Center of the Municipal Real Estate Administration the attached drawings to the contract dated July 18, 2006, when the Shenyang Municipal Real Estate Surveying Team conducted a survey of Gate 1 at No. 3, Mingbo Road, Hunnan New Area. These drawings clearly indicated the specific location of the property in question. In light of the above, the second-instance court held that all the documents related to the disputed property involved in the mediation reached among Tie XX Real Estate Company, Heng X Company, and Sheng X Company were indeed under the control of Heng X Company and Sheng X Company. The subsequent re-survey caused a significant change in the data recorded by the Shenyang Municipal Real Estate Administration—reducing the area from the original 1,049.39 square meters to 484.46 square meters. Heng X Company and Sheng X Company failed to consult with Tie XX Real Estate Company and obtain its approval, thus committing a fault and bearing corresponding legal consequences. Therefore, Tie XX Real Estate Company is entitled, based on the final mediation agreement, to demand that Heng X Company and Sheng X Company fulfill their obligation to return the property. Hence, the original court’s ruling supporting Tie XX Real Estate Company’s claim was justified. As for the specific location of the property, it should be determined according to the attached drawings to the contract dated July 18, 2006, when the Shenyang Municipal Real Estate Surveying Team conducted a survey of Gate 1 at No. 3, Mingbo Road, Hunnan New Area. The appellant’s appeal is unfounded and should be dismissed.

[Relevant Statute] Article 6 of the Tort Liability Law of the People's Republic of China: A person who, through negligence, infringes upon the civil rights and interests of others shall bear tort liability. According to legal provisions, if it is presumed that the actor was at fault, and the actor fails to prove that he or she was not at fault, the actor shall bear tort liability. Article 15: The primary ways of bearing tort liability include: (1) stopping the infringement; (2) removing obstacles; (3) eliminating danger; (4) returning the property; (5) restoring the original condition; (6) compensating for losses; (7) offering an apology; (8) eliminating the adverse effects and restoring one’s reputation. The above-mentioned methods of bearing tort liability may be applied individually or in combination.

Article 37 of the Property Law: If a property right is infringed upon, causing damage to the rights holder, the rights holder may request compensation for damages or seek other civil liabilities. Article 28 of the Property Law states: “Where a property right is established, altered, transferred, or extinguished as a result of a legal document issued by a people’s court or an arbitration commission, or as a result of an expropriation decision made by a people’s government, such effect shall take place from the time when the legal document or the expropriation decision of the people’s government becomes effective.” Furthermore, Interpretation (I) of the Property Law, Article 7, provides: “Judgments, rulings, and mediation agreements issued by people’s courts or arbitration commissions in cases involving the division of jointly owned immovable or movable property, which alter the original property rights relationships and have become legally effective, as well as auction adjudication orders and debt-for-asset adjudication orders issued by people’s courts during enforcement procedures, shall be deemed to be the legal documents issued by people’s courts or arbitration commissions referred to in Article 28 of the Property Law, which lead to the establishment, alteration, transfer, or extinction of property rights.”

Article 64, Paragraph 1 of the Civil Procedure Law of the People's Republic of China: The party making a claim has the responsibility to provide evidence for its own assertions.

[Lawyer’s Perspective] In this case, the Railway Development Company holds ownership of the property in dispute. As agreed upon in Mediation Agreement No. 8 of 2005 issued by the Shenyang Railway Transport Intermediate People’s Court between the Railway Development Company and Heng X Company, Plot No. 16, Unit 1, Floors 1-2 of Fengxiang New City (measured as 1,049.39 square meters according to the survey results provided by the Shenyang Real Estate Surveying Team on July 18, 2006) was assigned to the Railway Development Company as payment toward the investment funds advanced by the Railway Development Company. On May 8, 2007, Heng X Company, pursuant to Civil Ruling No. 8 of 2006 issued by the Shenyang Railway Transport Intermediate People’s Court (Shen Tie Zhi Zi No. 8), delivered a “Handover Document” to the Railway Development Company regarding the property being enforced. This Handover Document explicitly stated that the area of Unit 1, Floors 1-2 of the property involved was 1,049.39 square meters and formally handed over the property to the Railway Development Company. According to Article 28 of the Property Law: “Where the establishment, modification, transfer, or extinction of property rights is caused by legal documents issued by people’s courts or arbitration commissions, or by expropriation decisions made by the people’s government, such effects shall take place from the time when the legal documents or the expropriation decisions of the people’s government become effective.” Furthermore, Interpretation (I) of the Property Law, Article 7, stipulates: “Judgments, rulings, and mediation agreements issued by people’s courts or arbitration commissions in cases involving the division of jointly owned real or movable property, which alter the original property rights relationships and have become legally effective, as well as auction adjudication documents and debt-for-property adjudication documents issued by people’s courts during enforcement procedures, shall be deemed to be the legal documents issued by people’s courts or arbitration commissions referred to in Article 28 of the Property Law, which cause the establishment, modification, transfer, or extinction of property rights.” Therefore, through the already-effective mediation agreement and enforcement ruling, the Railway Development Company has acquired ownership of the property in dispute. Consequently, the Railway Development Company lawfully enjoys ownership of the property at issue.

Based on its ownership of the property in dispute, the Railway Development Company is entitled to demand that Heng X Company remove any interference, cease the infringement, and immediately vacate the premises. According to Article 34 of the Property Law: “If a person unlawfully occupies real or personal property, the rightful owner may request the return of the property.” And according to Article 35: “If someone interferes with property rights or there is a risk of such interference, the rightful owner may request the removal of the interference or the elimination of the danger.” Since the Railway Development Company holds ownership of the property in question pursuant to the final mediation agreement and ruling, it, as the rightful owner, is entitled to demand that Heng X Company cease its current unlawful occupation, remove any interference, and return the property—owned by the Railway Development Company—to the Railway Development Company.

The act of Heng X Company arbitrarily altering the apartment number—from the original No. 1 entrance to No. 2—cannot change the fact that the property in dispute remains owned by the Railway Development Company, nor can it be construed as meaning that the property in dispute does not exist, as confirmed in the mediation agreement. According to the effective mediation agreement and ruling, the Railway Development Company holds ownership of the property in question—the premises located at No. 16 Fengxiang New City, Unit 1, Doors 1-2, with a total area of 1,049.39 square meters as determined by the Shenyang Real Estate Surveying and Mapping Team on July 18, 2006. Although Heng X Company deliberately altered the door number of the property in question, this alteration does not change the actual existence of the property nor does it affect the rightful ownership of the property. The alteration carried out by Heng X Company occurred after the mediation agreement had already confirmed the property’s area and location; specifically, Heng X Company merely changed the designation of Unit 1, Door A, to simply Door 1, while re-designating the property at issue as Door 2. Such actions constitute malicious and unlawful occupation, seriously infringing upon the Railway Development Company’s ownership and property rights. Moreover, when the Shenyang Intermediate People’s Court for Railway Transportation issued the mediation agreement, the property objectively existed, and the agreement explicitly specified the property’s area, precise location, and door number. Heng X Company also acknowledged and delivered the property accordingly. The property explicitly identified in the mediation agreement still objectively exists today, has not been damaged or lost, and cannot be deemed non-existent merely because Heng X Company unilaterally altered the door number. Although Heng X Company re-designated the property in question as Door No. 2 and changed the original Door A to Door No. 1, this does not entitle Heng X Company to demand that the Railway Development Company accept the current Door No. 1. Therefore, Heng X Company’s actions constitute an infringement upon the legitimate rights and interests of the Railway Corporation, and it should bear tort liability by ceasing the infringement, removing any obstructions, and returning the property to its rightful owner.